Devin: THE LOCAL 4 "DEFENDERS" WERE IF THE FIRST TO UNCOVER THIS PROBLEM, LOTTERY WINNERS IN MICHIGAN STILL COLLECTING WELFARE PAYMENTS FROM THE STATE! AND THE PROBLEM IS BIGGER THAN ORIGINALLY THOUGHT. OUR STEVE GARAGIOLA HAS A LOOK. Steve: THE STATE BEGAN TAKING A CLOSER LOOK AT WELFARE BENEFITS TO LOTTERY WINNERS AFTER KAREN DREW'S INVESTIGATION LAST YEAR REVEALED THAT AMANDA CLAYTON RECEIVED $500 IN FOOD AND MEDICAL BENEFITS AFTER WINNING $1 MILLION IN THE LOTTERY. AS A RESULT, MICHIGAN LAW CHANGED. THE STATE REVOKED WELFARE ASSISTANCE TO MORE THAN 500 PEOPLE WHO WON LOTTERY PRIZES. THIS NEW STUDY REVEALS THAT ABOUT 3500 WINNERS WERE WELFARE RECIPIENTS OR LIVED IN A HOUSEHOLD WITH A WELFARE RECIPIENT. THE AVERAGE WINNINGS, $6800. SHOULD THEY BE CUT OFF? IT DEPENDS ON THE AMOUNT. YOU'VE GOT FREE MONEY COMING AT YOU, WHY DO YOU NEED MORE TO BE GIVEN TO YOU, AS WELL? YOU HAVE TO FIND THE LINE SOMEWHERE. Steve: WHERE IS THE LINE IF THEY WIN IN THE LOTTERY? AROUND HERE, THE MOST ANYONE HIT FOR WAS $5,000. YOU COULD PAY A FEW BILLS AND YOU'RE STILL OWING EVERYBODY. SO, NO, THEY SHOULDN'T DO THAT. Steve: MARA FROM THE DEPARTMENT OF HUMAN SERVICES SAID WE CAN IDENTIFY SUBSTANTIAL WINNINGS.

LANSING -

Michigan has found 3,500 lottery winners who either got welfare or lived with welfare recipients. The state Department of Human Services came up with the list as required under a 2012 state law. About 14 percent of lottery winners are either welfare recipients or live in a household with recipients.

As a result, Michigan law changed and the state revoked welfare assistance to more than 500 people who had won prizes.

The lottery winners flagged in Monday's report won at least $1,000. The state found welfare recipients on average won $6,800. Human Services Director Maura Corrigan says some lottery winners are no longer getting public assistance because of the law signed a year ago. But she says "loopholes" still let lottery winners collect some Medicaid benefits.

The law requires asset tests to determine eligibility for public assistance. Lawmakers passed it after a Bay County man used food stamps despite winning $850,000.

In a statement Corrigan said "in part, we can now identify substantial winnings, but the loopholes that allow lottery winners to continue to collect various benefits need to be closed. We ought to reserve assets for those who are truly needy."

Copyright 2013 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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